Hallmark Cards, Inc.

When three brothers decided to get into the greeting card business more
than ninety years ago, very few people exchanged cards. Today, greeting
cards have become big business with Hallmark Cards, Inc. leading the pack.
Hallmark produces almost four billion cards a year, nearly half of all
cards sold in the United States. Contributing to sales is the fact that
the company "invented" dozens of holidays, from
Secretary's Day and Bosses Day to Grandmother's Day and
Mother-in-Law Day, with a line of cards especially designed for each
event. There are even cards for your pet's birthday and electronic
cards that play music.

From Postcards to Greeting Cards

Hallmark first began in 1910 when founder Joyce C. Hall started selling
postcards from his room at the YMCA in Kansas City, Missouri. He moved the
business into a rented office later that year after the YMCA complained
about the large volume of mail he was generating. In 1911, he and his two
brothers, William and Rollie, formed Hall Brothers. The brothers
started selling greeting cards in 1912 as the popularity of postcards
began to decline. Two years later, the company began designing its own
cards, creating twenty engraved Christmas card designs. But disaster
struck in 1915 when a fire destroyed their office and their entire
inventory, including unfulfilled Valentine card orders, leaving the
company $17,000 in debt.

The brothers quickly rebounded, setting up shop in a new office with their
own engraving presses on which they printed their own cards. In 1916, they
opened their first retail store in Kansas City. The following year, Hall
Brothers designed a humorous greeting card and began producing and selling
the first Christmas gift-wrapping paper. In 1919, the company moved to a
larger building in Kansas City to accommodate its growing workforce, which
numbered twenty-five. They also introduced a line of friendship cards.

During the national prosperity of the 1920s, Hall Brothers rapidly
expanded, adding several hundred employees, including more than a dozen
full-time artists. The trademark name "Hallmark" first
appeared on the back of cards in 1925. The product line expanded to
include Christmas and other decorative seals, party invitations, birth
announcements, calendars, and sympathy cards. Hallmark advertisements also
appeared for the first time, in the
Ladies Home Journal.

The Hallmark Way

The 1930s saw the company continue to grow, despite the worldwide economic
depression. Hall Brothers began offering
its employees benefits almost unheard of at the time, including
retirement pensions, health care, life insurance, regular coffee breaks,
and paid vacations. It was the start of Hallmark's philosophy that
employees are the company's most valuable resource.

As a matter of fact, many corporate analysts attribute much of
Hallmark's continued success to the way it treats its employees.
Over the years, workers were offered a profit-sharing program and a stock
ownership plan. The company is privately held, with employees owning about
a quarter of the stock. Other current worker benefits include six months
of unpaid parental leave, financial help in adopting children, and sick
childcare leave. Hallmark often has made the top spot on several lists,
including one compiled by
Working Mother
magazine
that ranks the most admired and most employee-friendly companies in the
United States.

Offering the Very Best

During the 1930s, W. E. Coutts Company became Hall Brothers'
Canadian affiliate, or partner. The company also entered into a licensing
deal with the
Walt Disney Company
(see entry) to feature such Disney characters as Mickey Mouse and Donald
Duck on its cards. This was a first for both companies. In 1936, Hall
Brothers again moved to a larger building in Kansas City to house its
nearly eight hundred workers. It also introduced new products during the
decade such as cellophane wrapping and silk-screen cards.

The company continued to thrive during the 1940s despite World War II
(1939-45), opening manufacturing plants in Topeka and Leavenworth, Kansas.
In 1944, Hall Brothers introduced its now famous slogan, "When you
care enough to send the very best." It also began sponsoring the
wartime radio show, "Meet Your Navy."

As American culture transferred from radio to television, Hallmark also
made the jump. Hall, however, was not satisfied with the quality of
television programming and decided that instead of just buying advertising
spots, Hallmark would produce and sponsor its own shows. In 1951, Hallmark
debuted
Amahl and the Night Visitors,
the first original opera created specifically for television. It marked
the beginning of a series of television specials that later became the
Hallmark Hall of Fame.

After nearly forty years of being known as Hall Brothers or Hallmark, the
company officially changed its name to Hallmark Cards, Inc. in 1954. By
the time the company turned fifty years old in 1960, Joyce Hall's
son, Donald J. Hall, entered the ranks of company management as assistant
to the president. In addition, the continued growth of Hallmark forced the
company to move to larger headquarters in Kansas City to accommodate its
workforce of more than four thousand, including 350 artists. Hallmark was
producing four million cards a day, and introducing fifteen thousand new
products and designs each year.

Cleaning House

The 1960s brought about changes in the corporate leadership of Hallmark,
although the company remained a family affair. Donald J. Hall was named
president and chief executive officer (CEO), replacing his father, Joyce,
who remained chairman of the board of directors. Continued growth spurred
the company to build a new manufacturing plant in Topeka, Kansas, and
expand its Lawrence, Kansas, facility to 450,000 square feet. The company
was also doing well globally, which led it to form a subsidiary, Hallmark
International.

Critical Acclaim for
Hallmark Hall of Fame

Upset with the quality of early television, Hallmark founder Joyce C.
Hall decided to do something. In the early 1950s, he set about creating
a series of programs based on some of history's most critically
acclaimed books, stage plays, and operas. The first was the world
premier presentation of the opera
Amahl and the Night Visitors
by Gian Carlo Menotti (1911-), which aired on Christmas Eve 1951. In
1953, Hallmark debuted William Shakespeare's
Hamlet.
It was the first time a Shakespeare play was aired on TV.

Although the series maintained a focus on the classics, it also expanded
to include socially relevant stories written specifically for
television. These intimate portraits included
Teacher, Teacher
(1969), the story of a mentally challenged youth, and
My Name is Bill W.
(1989), which tells the story of the founding of Alcoholics Anonymous.
The program continues into the twenty-first century with such offerings
as
The Runaway
(2000), about two boys dealing with racial prejudice in post-World War
II Georgia, and
Follow the Stars Home
(2001), the story of a single mother raising a disabled child.

Over the years, the
Hall of Fame
original programs have won eighty-seven Emmy Awards, the highest honor
given in television. Among the award-winning programs are
jason and the Argonauts
(2000) and the great sea epic
Moby-Dick
(1998), written by Herman Melville (1819-1891). The roster of stars
that have appeared in Hallmark productions include Katharine Hepburn
(1907-), Paul Newman (1925-), Sidney Poitier (1927-), and Tommy Lee
Jones (1946-).

In the mid-1960s, Joyce Hall became concerned about the deteriorating
conditions in the Kansas City neighborhood where Hallmark's
corporate headquarters were located. When city officials failed to take
notice Hall decided to act on his own.
In 1966, he retired as CEO in order to devote more time to the issue. Two
years later he began construction of the Crown Center, a residential,
retail, and commercial real estate development designed to halt urban
decay in the neighborhood.

Part of the complex, which included office space, opened in 1971. The
first phase was fully completed in 1973 and included a shopping mall,
Westin Crown Center Hotel, and the Crown Center Ice Terrace. The first
phase of Crown Center's residential community was completed in 1976
with the opening of the San Francisco Tower Condominiums and Santa Fe
Place Apartments.

New Blood

In 1986, after Donald Hall had been running the company for twenty years,
Hallmark's board of directors thought it was time to select a CEO
from outside the family. It turned to Irvine 0. Hockaday Jr., who had
joined the company in 1977. When Hockaday was appointed CEO, it marked the
first time that Hallmark did not have a Hall family member at the helm.
Some industry observers believed that bringing in an outsider might cause
friction among the company's old guard.

It seemed, however, that new blood was exactly what Hallmark needed.
Hockaday was quickly accepted by the other top executives and led the
company through one of its most dynamic periods. Under Hockaday, Hallmark
went on a corporate buying binge, purchasing Litho-Krome, a printing
company based in Columbus, Georgia, and The Specialty Press Ltd., an
Australian greeting card manufacturer. It also bought Dawson Printing
Company in New Zealand. The Litho-Krome acquisition gave the company a
quality printing plant in the South. The other two purchases bolstered
Hallmark's international presence, allowing the company to cut
costs by producing cards directly in Australia and New Zealand.

The 1980s saw Hallmark continue to grow, helped by the purchase of Binney
& Smith, Inc., makers of Crayola crayons, in 1984. The company also
expanded its product line, introducing Shoebox Greetings, an offbeat line
of cards aimed at young, hip adults, and Mahogany, greeting cards designed
for African Americans.

Hallmark continued its buying spree into the 1990s when it acquired
several more companies, including Mundi-Paper, a Spanish greeting card
manufacturer, and RHI Entertainment, a television programming and
distribution firm. In 1996, RHI was renamed the Hallmark Entertainment
Network, and given the mission to produce and distribute miniseries and
movies made for television, including programs for the
Hallmark Hall of Fame.
It also operated the Hallmark Channel, a twenty-four-hour cable network
dedicated to family programming. Other acquisitions during the 1990s
included William Arthur, a producer of stationery products; Irresistible
Ink, Inc., a direct-mail company; Tapper Candies of Cleveland, Ohio; and
DaySpring Cards, Inc., an Arkansas-based maker of Christian-themed
greeting cards.

Back in the Family

Hallmark made a change in leadership in 2002 when Donald J. Hall Jr. was
named president and CEO, replacing Hockaday, who retired. The move came
after the company experienced a drop in revenues from $4.3 billion in 2000
to $4 billion in 2001. For the first time in sixteen years, a member of
the Hall family was again at the reins, and industry observers watched to
see if Hall Jr. could do the job. "Skill set is really the measure
here," said Paul Karofsky of Northeastern University's
School of Business in a 2001
Chief Executive
article. "And there's an obligation of family to perform to
a higher standard."

Hallmark Wrangles with
Blue Mountain

Hallmark ran into legal problems in 1986 when greeting card creator
Susan Polis Schutz and her husband Stephen sued the company for
copyright infringement. The couple, owners of Blue Mountain Arts of
Boulder, Colorado, claimed Hallmark had been using their designs on its
cards without permission or payment. The U.S. Supreme Court refused to
hear the case in 1988, allowing a lower court ruling against Hallmark to
stand. The company agreed to buy back hundreds of thousands of
Schutzinspired cards from Hallmark retail shops and pay the couple an
undisclosed amount. Writer Susan and artist Stephen founded Blue
Mountain Arts in 1970 as a small specialty greeting card manufacturer.
Today, although it still creates paper cards, Blue Mountain has become a
household name thanks mostly to the popularity of its Web site
www.bluemountain.com
, where browsers can send free e-cards to friends and family.

The biggest competition Hallmark and other greeting card companies faced
in the early twenty-first century was the Internet, where consumers could
log on to such sites as

The display Joyce C. Hall introduced when he first started selling
cards is still used in Hallmark stores today.

Reproduced by permission of AP/Wide World Photos.

www.bluemountain.com
and send electronic greeting cards, often accompanied by music, for free.
Another challenge was getting to know and understand the new card-buying
public. According to a 1999 article in
Time
magazine, "Female [baby] boomers buy cards, but they're
quite diverse in sensibility and ethnicity, so the one-size-fits-all
approach isn't working." The article further commented that,
"For Generations X and Y, paper cards may as well be stone
tablets."

To counteract this shift, Hallmark introduced a line of ninety-nine-cent
cards to attract customers who were put off by growing paper card price
tags. The company also added electronic card and gift options to its
Internet site. In addition, Hallmark tended to rely less on its ten
thousand retail shops (most run as independent franchises) and more on
large discount chains, such as Kmart and Wal-Mart (see entries), and
supermarkets and drugstore chains. But regardless of whether the cards are
paper or electronic, or are sold in a small specialty shop or a
mass-market chain, Hallmark is likely to remain the
leader in the greeting card industry. It will do so because of its
philosophy toward its employees and customers, which can be summed up in
the verse that appeared on the very first Hallmark card in 1916:
"I'd like to be the kind of friend you are to me."